Brexit Black Friday: George Soros predicts a plunging pound if Britain votes to leave EU

Billionaire currency trader George Soros believes a British vote to leave the European Union could severely damage living standards and trigger a plunge in the British pound bigger than on Black Wednesday nearly 24 years ago.

Writing in an opinion piece for the Guardian newspaper on Tuesday, Soros said the pound could fall by at least 15 per cent and possibly by more than 20 per cent. When Britain crashed out of the European Exchange Rate Mechanism in September 1992, the currency lost 15 per cent of its value. Britain’s referendum on EU membership takes place on Thursday and the results are expected the following day.

“I would expect this devaluation to be bigger and more disruptive,“ said Soros, adding: “To start off, (the pound) is almost certain to fall steeply and quickly if there is a vote to leave.”

The European Exchange Rate Mechanism was a financial system used to reduce volatility in exchange rates. At the time, Soros’s Quantum Fund bet that the British currency was overvalued against Germany’s Deutsche mark currency, forcing the British government to pull the pound out of the system. He made a billion-pound profit, or about US$1.5 billion. The incident happened on what has become known as Black Wednesday.

Soros said a fall in the pound in the event of “Brexit” — a British exit from the EU — was unlikely to bring a rise in manufacturing exports, which happened after 1992.

“If (the pound) fell to this level, then ironically one pound would be worth about one euro — a method of ‘joining the euro’ that nobody in Britain would want,“ he added.

Britain’s Justice Secretary Michael Gove, a prominent campaigner for the “leave” campaign, said Soros had been wrong before.